Food delivery app DoorDash has agreed to pay nearly $17 million to settle claims that it used customer tips to subsidise workers' wages in New York, rather than allowing drivers to keep the gratuities as extra income, Attorney General Letitia James announced on Monday.
Between May 2017 and September 2019, DoorDash guaranteed a base payment for each delivery but factored tips into that amount, effectively only paying workers the difference when tips fell short of the guarantee, according to the attorney general's office.
James said DoorDash also failed to clearly inform customers that their tips were being used to offset the company's labour costs. “This is just fundamentally unfair,” she said at a press conference in Manhattan. “Customers had no reason to believe that these tips were being used by DoorDash to reduce its costs.”
The settlement includes $16.75 million in restitution to be distributed to delivery workers who made deliveries for the company in New York during the specified period. Eligible workers will be contacted by a settlement administrator.
In a statement, DoorDash defended its pay model but welcomed the resolution. “While we believe that our practices properly represented how Dashers were paid during this period, we are pleased to have resolved this years-old matter and look forward to continuing to offer a flexible way for millions of people to reach their financial goals,” a spokesperson said.
